FSM Webcast > What and Where to Invest in 2018: Environmental, Social, and Governance (ESG): The Increasing Importance of Responsible Investment

What and Where to Invest in 2018: Environmental, Social, and Governance (ESG): The Increasing Importance of Responsible Investment

Leslie Yap, Head of Investments of Nomura Asset Management Malaysia Sdn Bhd shares his views on ESG.

In which market segment/sector Nomura finds particularly attractive within US equities?

At the moment, we are still very excited on the technology and to some extend the industrial space. We are living in a period whereby technology changes, new product, new software, people talk about artificial intelligence. Everyday there are so many new things, companies are trying to compete away on eCommerce, so that part we are still seeing some continuous momentum, earnings will come through for all these companies and that should continue to do well. Industrial as well to some extent, what we have seen is finally having seen a decade of very slow growth until 2017, people use the word synchronise growth globally. We see a lot of late cycle companies feeling more positive, more willing to invest and hence you will see that more in the year to come. Partly is also because of the US tax reforms by President Trump and the Republicans where they channelled a lot of money back into the economy so companies that save money on tax are looking to pay shareholders more, spend more on investment and give more to the staff in terms of special one-off bonuses. When all these go into the economy, you will see another round of very strong and sustainable growth.

What are the kind of companies that Nomura favours within UK equities? Could you give us one or two examples?

UK is a different market because unfortunately, they still have the Brexit overhang on the economy. So is natural that people have different negative impression or expectation on the UK. But we try to look for good stocks regardless they are UK or US stocks. Just happen that we have some names in the UK that the team likes so the company does industrial services where they supply catering globally. It is a good and sustainable business, feeding the workers, it is also a very fragmented market, maybe 2 or 3 big players but these markets are being consolidated gradually. Every year they are buying up small companies in the local markets so when they consolidate, naturally they will enjoy scale benefits and more structural. With a good economy, markets consolidating, defensive business - food catering, we actually like this company called Compass Group.

Currently, there are also increasing interests in ESG investing among investors. How is Nomura integrating ESG with the growth of their assets under management?

We have established quite a few things. In 2011, we have signed up as a United Nation Principle of Responsible Investment signatory. In 2013, we have started to integrate in our investment process especially for developed markets and in Japan - ESG analysis in our stock. We also set up a committee headed by our Tokyo colleague and he has 7 subordinates under him just to focus on ESG for Nomura globally. We also have a committee set up in London offices whereby we meet up quarterly to run through all the ESG works that we have done, areas we have to do more and who we have engaged, a lot more are being done and potentially there are new products that involve more ESG centric investment in the horizon.

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Broadcast Date : 27 February 2018
Video Duration : 00:05:56
Programme : What and Where to Invest in 2018: Environmental, Social, and Governance (ESG): The Increasing Importance of Responsible Investment
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